From Riyal to Dollar: Understanding Exchange Rate Impact on Saudi Market

The term 'From Riyal to Dollar' refers to the process of currency conversion or determining the value of the Saudi Riyal against the US Dollar in financial and investment transactions. In the Kingdom of Saudi Arabia, the Riyal is linked to the US Dollar at a fixed exchange rate, which has been part of the Kingdom's monetary policy since the 1980s to ensure financial stability. Understanding this conversion allows local and international investors to evaluate Saudi assets in dollars, which is crucial when comparing the performance of Saudi companies internationally or when calculating investment returns across currencies. Additionally, most international trade operations, such as importing raw materials or exporting products, are conducted in dollars, making the exchange rate between the Riyal and the Dollar vital in determining the cost and effectiveness of these operations. In the context of the Saudi stock market, this means that investors need to monitor any potential changes in the exchange rate as they affect the valuation of locally and internationally listed companies, as well as the profits that companies may achieve when converting between currencies.

Since the early 1980s, the Saudi Arabian Monetary Authority has adopted a policy of pegging the Riyal to the Dollar at a rate of 3.75 Riyals per dollar. This policy means that the value of the Riyal does not change freely against the Dollar but is fixed within a very narrow range, providing the Saudi market with price stability and reducing currency volatility. The importance of this peg is highlighted in the trade and investment sectors, providing investors with a lower-risk environment regarding currency movements and allowing Saudi companies to plan their financial operations without worrying about daily exchange rate fluctuations. However, the Kingdom still needs to monitor US monetary policies, particularly regarding interest rates, to maintain internal stability and the attractiveness of the Riyal. This policy necessarily affects profitability equations when converting profits from Riyals to Dollars or vice versa, which is reflected in the valuation of Saudi assets and stocks in global markets.

Despite the fixed official exchange rate between the Riyal and the Dollar, several economic and political factors influence the sustainability of this peg and the strength of the Saudi Riyal. The first of these factors is the performance of the Saudi economy itself, particularly oil prices, which are the main source of national income. Rising oil prices enhance foreign reserves and support the stability of the Riyal, while a decline may exert pressure on the local currency. Additionally, global political and economic conditions play an important role; regional or global tensions may drive investors to seek safe havens like the Dollar, affecting capital flows between currencies. Monetary policy, specifically changes in interest rates in the United States, indirectly affects the Riyal as the Saudi Monetary Authority must align its policies with the US Federal Reserve to maintain the peg and currency stability. Finally, local inflation and economic growth rates remain indicators monitored by authorities to ensure the continuity of the peg without inflationary or deflationary pressures.

Exchange rates between the Riyal and the Dollar can be monitored through several reliable sources. The most prominent of these sources are the official websites of the Saudi Arabian Monetary Authority (SAMA), as well as global financial sites like Bloomberg and Reuters that provide real-time currency data. Major Saudi banks and their banking applications also offer continuous updates on the exchange rate, with the possibility of setting alerts for significant changes. Furthermore, foreign exchange trading platforms and online currency conversion tools allow for instantaneous conversions from Riyals to Dollars, making it easier for investors and companies to know the exact value of any transaction. This monitoring is essential, especially when evaluating investments or executing international deals, to ensure the accuracy of financial calculations and avoid any losses resulting from sudden changes in the exchange rate.

During 2024 and 2025, the exchange rate between the Saudi Riyal and the US Dollar remained stable at 3.75 Riyals per Dollar, according to the pegging system followed by the Kingdom. No significant changes were recorded in the official market, while the price differentials in the parallel market remained very limited, at less than 0.1%. The Monetary Authority follows a precise policy to maintain this level of stability, supporting financial stability and reducing risks associated with currency fluctuations. The fixed peg policy is considered one of the most important guarantees for attracting foreign investments and enhancing the confidence of local and international market participants in the Saudi market. It is worth noting that this stability does not prevent slight impacts resulting from changes in global oil prices or US monetary policies, but Saudi authorities respond quickly to maintain exchange stability within the defined official range.

The exchange rate between the Riyal and the Dollar directly and indirectly affects companies listed in the Saudi financial market. Although the exchange rate remains stable, any changes in US monetary policy or global oil prices may impact the profitability of these companies, especially those reliant on importing raw materials or having international dealings in Dollars. Exporting companies benefit from the stability of the Riyal in pricing their products internationally, allowing them to plan their revenues more accurately. Conversely, companies may face challenges if sudden changes occur in financial or economic policies, which may reflect on profit margins and asset valuations. Additionally, foreign investors prefer to invest in a stable currency environment, enhancing the attractiveness of Saudi stocks globally. Therefore, understanding the relationship between the Riyal and the Dollar remains essential for evaluating the performance of Saudi companies in a neutral and realistic manner.

Hail Cement Company is one of the leading companies in the cement manufacturing sector in the Kingdom of Saudi Arabia. The company was established to meet the needs of the construction sector in the Hail region and neighboring areas, offering a variety of cement products used in major infrastructure projects. The company is distinguished by its strategic location, allowing it to benefit from urban development projects and government construction. Its shares are listed on the Saudi financial market (Tadawul) under the symbol 3001. The company adheres to governance and financial disclosure standards, issuing periodic financial reports that reflect its financial and operational performance, providing investors and sector stakeholders with a clear picture of its developments. The company relies on a mix of local production and modern technologies, striving to maintain the quality of its products and expand its market share amid intense competition in the sector.

The financial indicators of Hail Cement Company are based on periodic performance results, including share price, market capitalization, price-to-earnings ratio (P/E), and annual distribution ratio. In 2024, the share price of Hail Cement ranged between 35 and 45 Riyals, approximately equivalent to 9.3 to 12 Dollars at the fixed exchange rate. The company's market capitalization was estimated between 2.0 and 2.5 billion Riyals (0.53 to 0.67 billion Dollars). The price-to-earnings ratio was in the range of 8 to 12, which is a moderate rate compared to the sector average. The annual cash distribution ratio was about 5% to 7% of the share value. Converting these indicators from Riyals to Dollars enables international investors to evaluate the company by global standards, while also helping local investors compare Hail Cement's performance with its peers in international markets. For more details on the stock's performance, visit the stock page on Tadawul: /stocks/3001/

The Saudi cement sector is a cornerstone of urban development and infrastructure projects in the Kingdom. Several factors influence this sector, including government spending on housing projects and new cities, raw material and energy prices, and the level of local and regional demand. The sector includes several leading companies such as Southern Cement, Qassim Cement, and Najran Cement, alongside Hail Cement. Competition in this sector is characterized by occasional overproduction, leading to price declines and increased inventory, although large government projects like Vision 2030 gradually raise demand. The company's success depends on its geographical location, product quality, and transportation costs. Energy prices also directly affect profit margins, making monitoring local and global markets a constant necessity for all companies operating in this sector.

Monitoring exchange rate news and the cement market is essential for followers and investors. The Saudi Arabian Monetary Authority issues periodic data confirming the continuity of the fixed peg of the Riyal to the Dollar, clarifying any changes in monetary policy or interest rates. In the cement sector, companies issue semi-annual and annual financial reports showcasing profit results, cash distributions, and expansion plans. Economic newspapers and financial websites publish analytical reports on market performance, new projects, and the level of demand for cement, helping investors form a comprehensive view of the sector's future. It is important to note that all this news should be treated with complete neutrality without drawing investment recommendations, as final decisions remain subject to personal analysis and consultation with licensed experts.

Converting financial indicators from Riyal to Dollar is a necessary step for evaluating Hail Cement's stock from an international perspective. This allows investors outside the Kingdom to compare the company's performance with its global counterparts, and it is also used in emerging market indices that rely on the Dollar as a basis for comparison. With the stability of the exchange rate, the valuation of the stock in Dollars becomes clearer and less susceptible to sudden fluctuations, enhancing the attractiveness of the stock in global investment portfolios. However, should any changes occur in the exchange rate or monetary policy, the stock's value internationally may be affected, even if its performance in Riyals remains stable. Therefore, understanding the relationship between the Riyal and the Dollar remains a fundamental factor when analyzing investment opportunities in Saudi stocks, especially those listed in emerging market indices or targeting external expansion.

The Saudi cement sector is closely linked to global economic transformations, especially those related to oil and energy prices. When oil prices rise, the government's ability to spend on infrastructure projects increases, leading to higher demand for cement. Conversely, if prices decline or global economic crises occur, demand may temporarily decrease as projects are postponed or scaled back. Additionally, changes in US monetary policies (such as raising interest rates) affect capital flows to emerging markets, including the Saudi market. However, the stability of the exchange rate between the Riyal and the Dollar mitigates the severity of negative impacts, providing companies like Hail Cement with an additional margin of safety when implementing their expansion plans or when importing equipment and technologies from abroad.

Hail Cement Company is keen to distribute a portion of its profits annually to shareholders, with distribution ratios ranging between 5% and 7% in recent years. These distributions reflect the company's stability and its ability to generate sustainable profits, making it an attractive factor for investors seeking regular income. Additionally, announcing large dividends reflects management's confidence in the company's future, enhancing the stock's attractiveness in the market. Conversely, investors should compare the distribution ratio with the sector average and consider the general economic conditions that may affect the company's ability to maintain distributions at the same rates in the future. Studying the factors affecting profits, such as production costs and energy prices, remains essential for analyzing long-term distribution expectations.

The fixed peg policy between the Riyal and the Dollar provides a stable environment for investors in the Saudi financial market; however, this does not exempt them from the necessity of monitoring the economic factors affecting the exchange rate. Any changes in oil prices, global monetary policies, or local inflation levels may impact the international valuation of Saudi assets. Investors should analyze financial indicators in both Riyals and Dollars and compare company performance with regional and international peers. Consulting licensed financial advisors remains a crucial step before making any major financial decisions to ensure a comprehensive assessment of the risks and opportunities available in the market.